Fundraising is like a fine wine

March 18, 2013 erik Fundraising

As you know, last week I re-ran five of the most viewed DonorDreams blog posts because I needed to take a break. What I didn’t tell readers is that the break was really a week-long vacation to see old friends and visit California’s Sonoma County wine country for the second time in my life. If you haven’t had the opportunity to visit California wine country, then you have to add it to your “bucket list”. It was spectacular!

So, here I am . . . sitting at my desk . . . first day back . . . struggling with the idea of getting back in the saddle again.

As I reflect back on the last week, I can honestly say that visiting wineries invoked lots of thought about fundraising such as:

Cultivation
Stewardship
Patience
Aging

So, I’ve decided that on my first day back at my desk, I will share a few vacation pictures with you as well as a few links from a Google search focused on the terms “wine” and “fundraising”. Cheers!

Jus a few results from Google search

“Like a Fine Wine, Fundraising Should be Savored” by Lisa Krueger at Step By Step Fundraising
“Wine Fundraising Ideas” at Giving Vines
“Wine Tasting Fundraising Ideas” at Fundable.org
“2 Types of Wine Fundraising” at Articlesbase
“Ehlers Estate Winery” (aka non-profit winery) atNapa Valley Wine Blog
Wine to Water

Mmmmm . . . all this talk about wine and fundraising is making me thirsty and it is only 8:00 am. Come to think of it, I also need to start making a few phone calls to set-up meetings with area donors to talk about this year’s annual campaign. Hmmmmm? I wonder if I can combine these two lovely tasks? 🙂

As they say in wine country . . . CHEERS! I’ll see you tomorrow where we’ll talk about the Charles M. Schultz Museum and how it inspired a few thoughts by which fundraising professionals should live their professional lives.

Here’s to your health!

Erik Anderson
Founder & President, The Healthy Non-Profit LLC
www.thehealthynonprofit.com
erik@thehealthynonprofit.com
http://twitter.com/#!/eanderson847
http://www.facebook.com/eanderson847
http://www.linkedin.com/in/erikanderson847

Non-profit fees for service and the smell test

March 15, 2013 erik Fundraising

It has been an exhausting whirlwind of work the last few months. While I would never dare complain about work so as not to upset the consulting gods, I need to take a short break. So, this week I will re-run some of the most viewed DonorDreams blog posts on fundraising and leadership. I hope you enjoy today’s post on fees for service. Enjoy the flashback! ~Erik

Non-profit fees for service and the smell test

Originally published on February 17, 2012

In a previous post, I blogged about the idea of non-profit organizations looking in some non-traditional places to generate revenue such as “selling things” through unrelated business income efforts. Of course, I see non-profits also looking at “related” business income opportunities. Today, I’m turning my attention from external opportunities to “sell stuff” (e.g. thrift stores, eBay, amazon.com, etc) in an effort to create revenue streams and looking inward at internal opportunities to sell your services by charging fees.

It would be too easy for me to take the position that instituting fees to sell your non-profit services to your clients amounts to nothing more than selling your soul. However, as we discovered in Tuesday’s post titled “Should the new non-profit mantra be: Sell! Sell! Sell!” many non-profits are generating a lot of revenue from fees for service — 45 percent of the approximate $1.5 trillion in non-profit revenue comes from fees and services.

I think my blogger friend, Joanne Fritz of about.com, got it right in her post titled “Can a Nonprofit Charge Fees for Its Services?” when she suggested there is a “smell test” that needs to be passed before a non-profit should ask its clients to pay fees for the services it offers. Let’s have some fun with this smell test idea:

<<sniff>> I don’t think domestic violence victims should be asked to pay for a place to spend the night safe from their abuser.
<<sniff>> It seems reasonable to ask students at publicly subsidized universities to pay some tuition.
<<sniff>> It don’t think hungry people should be asked to pay for the food they’re given at a food bank.
<<sniff>> It seems reasonable to ask patients at a non-profit hospital to pay for care and medical attention

Well, that was easy wasn’t it? Hmmmmmm . . . not so fast! The reality is that this issue can put your agency on the proverbial “slippery slope”. Let’s take a closer look:

Why should YMCA’s be able to charge fees to access their fitness programs? Doesn’t their non-profit tax-exempt status give them an unfair competitive advantage over for-profit companies doing the exact same thing? If you ask Bally’s Total Fitness and the fitness center industry, they’d likely say YES . . . the trail of lawsuits throughout the years would seem to support this assertion.
Why should public universities continue to charge more and more for a college education when they can also fundraise and access other funding streams that for-profit institutions of higher education can’t touch? Doesn’t their non-profit tax-exempt status give them an unfair competitive advantage?

In this “New Normal” economic environment, I do think non-profit professionals are eyeing opportunities to “sell stuff” to enhance their revenue streams. However, discretion is the better part of valor when it comes to giving in to this emerging trend because it is one thing to look at the for-profit marketplace to sell stuff, but it can be a completely different issue when you start selling your services (and your soul).

Take the Boys & Girls Club movement as a great example. It is the mission of Boys & Girls Clubs to help “those kids who need us most,” which in most cases translates into providing services to kids from “economically disadvantaged circumstances”. There are a number of Clubs doing the math on charging fees for their services.

While it is true that Clubs have charged membership fees for more than a century, it has always been nominal . . . $1.00, $5.00, $25.00 . . . for a one year membership to the Club. This was done to create a “sense of ownership” because the value associated with something given away for free is NOTHING.

However, what happens to this organization’s soul when fees go from being a program tool to a revenue stream . . . $50.00, $100.00, $250.00, $500.00 per year? At what point are you soulless? At what point do your clients walk away? At what point does your mission collapse under the weight of fee for service”? At what point does the IRS enter the picture and revoke your non-profit status?

I’m not suggesting that fee for service isn’t an acceptable model for some non-profit organizations. What I am suggesting is that passing the smell test is more difficult than you may think, and it requires serious board room consideration.

So, here are a few questions I recommend board members ask themselves:

Are there for-profit corporations in your community providing similar services? If so, then why should you have a competitive tax advantage over them?
If your fees for comparable services are similar to other for-profit competitors, what differentiates you and makes you special enough to have a tax advantage?
What is stopping you (and I mean really stopping you) from doing a better job with more traditional revenue streams that are unique remedies to non-profit corporations (e.g. fundraising, foundation grant writing, and various other philanthropic opportunities)?
What will your donors think? And at what point will fees damage your philanthropic business model? (e.g. donors balking at giving you a charitable gift because they think you can just hike fees or go sell some more stuff)

So, before you leap I suggest you look. You might not have a revenue problem that needs to be fixed with a fee for service solution. You may have a human resources and staffing issue. You may have board development or volunteer issue. Of course, you may have a revenue model issue that needs to be tweaked with the addition of some fees for service.

Here is some unsolicited advice . . . If you want to “sell stuff” to generate revenue, it is far safer to open a store and weave your mission throughout its operation (e.g. Wednesday’s blog post about thrift stores or Thursday’s post about eBay and Amazon.com) than it is to look internally at selling your services and raising revenue on the backs of those you serve.

What is the going price for a soul today? I think is it PRICELESS.

Here’s to your health!

Fundraising questions to ask of donors and anticipate from them

March 14, 2013 erik Fundraising

Fundraising questions to ask donors and anticipate from them

Originally published on June 21, 2012

Last week we started a series of blog posts focused on the art of asking questions, and this theme has carried over into this week. So far, we’ve looked at questions that executive directors should be asking themselves and their boards. We’ve also looked at questions board members should be ask of themselves and their fellow board volunteers. Yesterday, we looked at various questions you need to ask prospective board members before asking them to join your board. Today, we’re ending this series of posts by looking at 1) powerful questions that donors should be asking the non-profit agencies they support and 2) questions non-profits should be asking their supporters.

Questions that donors have of you

Over the last 15 years, I have been part of countless solicitation teams and answered more questions than I care to recall at this time of the morning. While those questions tend to be all over the place thanks in part to “unique circumstances,” there are commonly asked questions that many donors seem to ask after they’ve been asked to consider making a charitable contribution.

What will my contribution help accomplish?
Specifically, how will my contribution make a difference in your clients’ lives?
How financial stable is your organization?
There are so many worthy causes that keep asking for support. Why should I support you?
How much of my contribution directly supports programming and how much will underwrite administrative and fundraising expenses?
Tell me more about your fee structure and why are you charging your clients what you’re charging them? How do you know that is the right amount? Why not more?

The list of FAQs is much larger, but these are just questions that I recall answering over and over again. If you want a more comprehensive list of questions, you may want to read Harvey McKinnon’s book “The 11 Questions Every Donor Asks: And the Answers All Donors Crave“.

Why is it important to know what burning questions to expect? I think there are two HUGEreasons:

If you do a better job “anticipating” these questions and build those answers into your case for support and solicitation presentation, I predict that your annual campaign numbers will start climbing.
There is a long list of fears that get in the way of people volunteering to help your agency with fundraising. One of the top reasons is their fear of not being able to answer questions. Addressing FAQs as part of your annual campaign training program will improve volunteer confidence, reduce the amount of avoidance behavior during the campaign, and result in better solicitations (and hopeful result in better fundraising numbers).

Questions that you should have of donors

As I said earlier, I’ve been on many fundraising solicitation teams, and I’ve seen many things throughout the years. Too often, I’ve seen volunteers rush through the solicitation, get a commitment, and quickly downshift into chit-chat of a personal nature. It is almost as if the volunteer solicitor is non-verbally saying “Phew! Thank goodness that is over.”

I don’t believe there is anything wrong with chit-chat after the solicitation is completed. In fact, there is all sorts of important personal information that could and should be harvested from that conversation, captured on a contact report form, and entered into the donor database. However, most volunteer solicitors don’t receive training on what those conversations should look like.

While it would be easy to use that post-solicitation time to talk about family and personal things, it think the following questions might be more useful in developing a deeper philanthropic relationship with your donors:

If you only had one year to live, what would be most important to you to accomplish?
What are the issues, injustices, principles or causes in this world that get you riled up?
If you could change one thing in the world, what would it be?
What accomplishment or legacy would have ultimate significance to you?
In philanthropic terms, if you had unlimited resources, what would you set out to do?

While it is important to know the names of a donor’s spouse and children as well as where they went to school or go to church, I think it is far more important to understand a donor’s passions, dreams, and desires. Knowing and understanding these things puts you in a position of helping them achieve big things. I believe this is one of the biggest differences between transactional fundraising and donor-centered fundraising™.

I believe these types of questions can transform how a donor views you and your organization . . . FROM fundraising vulture TO philanthropic dream-maker.

Please take a minute this morning to share a commonly asked question that you hear donors asking your volunteer solicitors in the comment box below. Or share with this online community one or two questions that you like to ask donors that helps you better understand their philanthropic hopes and dreams. We can all learn from each other and it is just 60 seconds out of your day. Please?

Here’s to your health!

Questions every non-profit executive director should be asking

March 13, 2013 erik Fundraising

Questions every non-profit executive director should be asking

Originally published on June 14, 2012

Tony Stoltzfus explains in his book “Coaching Questions: A Coach’s Guide to Powerful Asking Questions” that there are many reasons why asking questions is important. I highlighted the following three reasons:

Asking empowers
Asking develops leadership capacity
Asking creates authenticity

I believe the very first reason in this list explains why non-profit executive directors need to get better at asking questions of their board members. The following is what Tony says about “asking empowers”:

. . . roughly 80% of the time, I find that they already know what to do: they just don’t have the confidence to step out and do it. Self-confidence is a huge factor in change. When you ask for people’s opinions and take them seriously, you are sending a powerful message: “You have great ideas. I believe in you. You can do this.” Just asking can empower people to do things they couldn’t do on their own.

Sure, Tony is talking about executive coaching in that passage, but in some regards executive directors serve as a coach to the board of directors. At least sometimes . . . right? (Yes, that job involves a weird little dance and sometimes the board leads and other times the executive director leads. Sigh!)

I cannot tell you how many non-profit executive directors tell me that their board members are disengaged. While there can be many reasons for this phenomenon, one reason could be that the executive director is doing too much talking and not enough asking. Think about it for a moment.

When I decided to open The Healthy Non-Profit LLC last year, I saw a blog post from Seth Godin titled “Questions for a new entrepreneur“. After reading it, I posted it to the bulletin board in my office. I periodically go back and re-read it because the questions he suggests a new business owner ask are right on target. Here are a few of those questions that I think are applicable to non-profit executive directors:

Are you aware of your cash flow? What’s your zero point? What are you doing to ensure you get to keep swimming?
What’s your role?
Are you trying to build a team?
Why are you doing this at all?

Circling back around to the idea of engaging board members, here are a few questions I found in Tony Stoltzfus’ book “Coaching Questions: A Coach’s Guide to Powerful Asking Questions” that I believe non-profit executive directors should be asking of their board members in committee meetings and in the boardroom:

Where do you see this going?
How do you want things to turn out? What’s the best possible outcome?
What do you think this looks like from the other person’s point of view? (e.g. donor, client, staff, etc)
How do you feel about that?
What are the real issues here?
How should we make this decision?
What do you need to know to make a great decision?
What would a great decision look like?

I believe the following Ralph Waldo Emerson quotation can best summarize how important a good executive directors can be to their board of directors, especially if that executive director knows how to ask really powerful questions:

“Our chief want is someone who will inspire us to be what we know we could be.”

What questions do you hear being asked by executive directors? Are they powerful and engaging questions? Please use the comment box below to share a few examples.

Here’s to your health!

Non-Profit Trends and Predictions: Volunteerism

March 12, 2013 erik Fundraising, volunteers

2012 Non-Profit Trends and Predictions: Volunteerism

Originally published on December 29, 2011

This week I’m looking back upon 2011 for major trends, and then looking forward to 2012 with an eye towards making a few predictions. Today, we are looking at non-profit volunteer recruitment, retention and management.

Throughout the course of 2011, I had the opportunity to write about non-profit organizations and volunteerism. I’ve kept my eyes open for signs of what non-profits are doing with volunteers, and I see indicators everywhere pointing to:

2012 continuing non-profit agencies’ focus on volunteerism.

Here is what I’ve seen that leads me to this conclusion:

My fellow Generation Xers continue to increase the amount of time they spend volunteering. (I personally suspect this has less to do with their charitable outlook on life and a lot more to do with the fact that they’re in the heart of their child rearing years)
I see my parents’ Baby Boom Generation starting to retire, and they just don’t know what to do with themselves when they wake up in the morning. They are volunteering because they don’t see themselves as being old and they want to keep busy.
I see my Millennial generation friends standing in the unemployment line, and then turning around in search of volunteer opportunities that they hope might just turn into a job opportunity (or at the very least turn into a great reference or a referral).
I see my former employer — Boys & Girls Clubs of America — partnering with one of their major corporate supporters to fund a volunteer management pilot project in an effort to develop a program to teach their local affiliates to become better with volunteer recruitment, retention and management.
I see corporations demanding volunteer opportunities and projects from their philanthropic partners in an effort to drive down their employee turnover rates and grab onto what marketing professionals call “the halo effect”.
Let’s not forget about the research out there on the Millennial generation that shows this emerging generation is very much into volunteerism unlike any other recent generation.
According to a recent Guidestar survey, many non-profit agencies are trimming staff or putting a cap on hiring plans in 2012. Not surprisingly, the same survey showed that 65-percent of all non-profit respondents are looking for volunteers for program work and 54-percent are looking for volunteers for administrative work.

The reality is literally this simple . . . donors are saying they want to see non-profits do more with less . . . volunteer recruitment and management helps accomplish exactly this . . . and in the final analysis volunteers turn into new donors a lot easier than cultivating new prospects from scratch.

Investing in volunteerism could just turn out to be the non-profit sector’s version of an economic stimulus plan that pulls agencies out of their economic doldrums.

Volunteer recruitment, retention and management isn’t as easy as just putting out a call for volunteers. As with everything in life, it is science that requires planning and careful management.

Since the economic collapse four years ago, this trend has been taking form and the non-profits who are leading the way have been experimenting with such things as: volunteer databases, volunteer coordinators, various recruitment strategies, strategic alliances with agencies that specialize in volunteerism, recognition programs, orientation and training programs, placing value volunteer hours, and much much more.

As budgets get even tighter in 2012, the flood of non-profits who commit themselves to figuring all of this out will continue to propel this long-term trend.

Is your agency recruiting more volunteers? How has it gone about doing so? What challenges have you experienced along the way? How important is it to have a volunteer coordinator on your payroll to orchestrate recruitment, orientation, training, volunteer opportunity assignment, evaluation, retention, etc? How successful have you been at turning volunteers into new donors?

Please scroll down and use the comment box to weigh-in with your thoughts and experiences. We can all learn from each other.

Here’s to your health!

Gift acknowledgement letters, quid pro quo and the IRS

March 11, 2013 erik Fundraising

Gift acknowledgement letters, quid pro quo and the IRS

Originally posted on March 27, 2012

I cannot count the number of times that I’ve attended a non-profit organization’s special event fundraiser and walked away with a gift acknowledgement letter that was not compliant with “IRS Publication 1771, Charitable Contributions–Substantiation and Disclosure Requirements”.

Rather than use the language of accountants and tax professionals to explain, I’ll let the following hypothetically example speak for itself.

My first contribution to “Agency X” is the purchase of two dinner tickets for what I am hoping will be the best rubber chicken of my life. My out-of-pocket expenses to get in the room is $120.
When I show up, I am assaulted by happy volunteers selling 50-50 raffle tickets. My out-of-pocket expenses to get these intensely happy people who are blocking my path to the bar is $20.
With a nice glass of wine in my hand, I am finally able to mingle with old friends, but I end distracted by all of the shiny objects in the silent auction. <<Sigh>> At the end of the evening, I discover that “Agency X” is deeper into my wallet for another $250 in out-of-pocket expenses.
The final blow came many glasses of wine into the evening during the live auction (ahhhh, of course it is always the booze and the live auction that sinks most donors). Those Opening Day Chicago Cubs tickets had my name written all of them and only cost $1,000.

So, the next morning usually comes with a hangover and regret (even though “Agency X” is an amazing charity and you’re always happy to have supported their awesome mission). A few days later in the mail comes a gift acknowledgement letter. It tells me how wonderful I am and contains some nice “return on investment” and stewardship verbiage. Ahhhh, gotta love that warm fuzzy feeling.

You’re probably wondering “What’s wrong with all that?”

Well, the gift acknowledgement letter thanked me for my charitable contribution of $1,390.

Sure, if you do the math $120 + $20 + $250 + $1,000 does add up to $1,390, but this was not size of my “charitable contribution” according to the Internal Revenue Service, and now I need to take time out of my busy day to chase down the executive director or fundraising professional at “Agency X” for a correct letter. To help clarify the math, here is exactly what the IRS has to say on the subject:

“A donor may only take a contribution deduction to the extent that his/her contribution exceeds the fair market value of the goods or services the donor receives in return for the contribution; therefore, donors need to know the value of the goods or services.”

Let’s circle back and do the math one more time:

The event tickets cost $120, but the food I received in exchange for the ticket purchase was valued at $20 per plate. So, $120 minus $40 means that the charitable contribution only amounted to $80.
The $20 in raffle tickets got me four chances at a cash prize. The “value” I received for those chances was twenty bucks. So, $20 minus $20 means that I didn’t make a charitable contribution in the eyes of the IRS.
The silent auction was a huge benefit to me because I got some amazing bargains. Woo Hoo! Move over Wal-Mart! So, I might have spent $250, but the items I won totaled $500 in value. So, $250 minus $500 means that I didn’t make a charitable contribution in the eyes of the IRS.
And last but certainly not least, there was the booze fueled live auction. The bad news . . . it was $1,000. The good news . . . I finally got something to write off on my taxes. Opening Day tickets to see another woeful season of the Chicago Cubs are valued at $500 (of course, White Sox fans would argue that they are worth nothing). So, $1,000 minus $500 means that I can deduct $500 from my taxes next year.

The IRS tells us that it is legitimate to acknowledge my overall gift of $1,390 as long as somewhere (usually at the bottom of the letter in a footnote) there is language that explains that the fair market value of the items I purchased was $810 and only $580 of my $1,390 contribution is tax-deductible.

In my experience as a donor, this rarely happens and I end up wasting my time chasing after a new gift acknowledgement letter. The harm to “Agency X” is twofold:

It is counterproductive to annoy the donor. This is not good stewardship and doesn’t help “Agency X” in its efforts to secure the next contribution from me.
It can result in fines to “Agency X” if the IRS ever found out.

What is the potential penalty? Here is what the code says:

“A penalty is imposed on charities that do not meet the written disclosure requirement. The penalty is $10 per contribution, not to exceed $5,000 per fundraising event or mailing.”

If you want to learn more, Joanne Fritz at about.com does a nice job explaining it. You can also click here to get it directly from the IRS.

Note: “Agency X” does not exist. I am not calling out any one particular non-profit organization in my philanthropy portfolio. The aforementioned examples are a “compilation” of things I’ve purchased over the last 10 years. Please don’t add me to you special event mailing list. :-)

Please scroll down and use the comment box below to share the “boilerplate language” that your agency uses at the bottom of its special event gift acknowledgement letters. Please trust me that 30 seconds of your time will benefit countless smaller non-profit agencies. If I had a nickel for every time I was asked for sample boilerplate language, I’d be rich! We can all learn from each other.

Here’s to your health!

Fundraising, stonecutters and ignoring best practices

March 8, 2013 erik Fundraising, organizational development, volunteers

Welcome to O.D. Fridays at DonorDreams blog. Every Friday for the foreseeable future we will be looking at posts from John Greco’s blog called “johnponders ~ about life at work, mostly” and applying his organizational development messages to the non-profit community.

In a post titled “All That Had Gone Before,” John gets philosophical. He points out how a stonecutter’s success is attributed to a series of chips just like your successes in the workplace is the result of the people who came before you. He says, “Our results today; our performance today; our effectiveness today; is not from what we have done today; but all that we’ve done before.”

I read this and immediate think of a recent fundraising training that I facilitated for a bunch of volunteer solicitors.

In my training, I talk about the 12 steps to making a successful face-to-face solicitation. If followed exactly without any corner cutting, each step is designed to quiet our “inner saboteur’s voice,” which is rooted in fear and the mistaken belief that we are “begging for money.”

I’ve conducted this training almost 100 times in my life (if not more), and it never ceases to amaze me how many people don’t want to slowly and methodically chisel away at their solicitations by following the 12 step process. Here are some of the most recent things I’ve heard people say in the wake of this training:

“I don’t need to make my own pledge before going out to solicit my friends. I know that it is the first step in the 12 step process, but I give my time and that should be enough.“
“If the donor indicates that they don’t want to meet with me, I’ll just solicit them over the phone. I know these people well enough so there won’t be a difference between a phone and in-person solicitation.“
“I know that I shouldn’t leave the pledge card behind with the donor, but I know this donor very well and they will send it in and everything will be fine.“

These people used to frustrate me. After all, they don’t seem to understand these best practices were developed by countless numbers of volunteers and professionals before them. Ugh! However, after reading John’s blog post, I’m going to attempt to change my perspective.

From this point forward, I will simply look at these folks as inexperienced stonecutters who are trying to split that big rock in half with just one or two swings of the hammer. They choose to ignore all of the progress made by everyone who preceded them because they are simply apprentice stonecutters. Right?

As a non-profit and fundraising professional, how do you channel your inner stonecutter when working with donors? When working with fundraising volunteers? When working with your board? Please scroll down and share your thoughts in the comment box below. We can all learn from each other.

Here’s to your health!

A celebration of African American philanthropy

February 28, 2013 erik Fundraising

Ah, yes. It is February 28th once again, which signifies the end of another successful Black History Month. While on the treadmill this morning, I scratched my head and wondered how we got to the end of February so quickly. My mind also wandered back to an old training curriculum that I used to use that was titled “Changing with the Times: Adapting Fundraising to a New United States“.

I went back and dusted off this curriculum because there are a few tidbits I think are appropriate to share on this last day of Black History Month.

Institutions built

Racial stereotypes are so dehumanizing. I cannot tell you how many people I’ve talked to throughout my career who obviously view the African American community as “recipients” of philanthropy and not “participants”. You don’t need to look any further than the following organizations to understand how incorrect those stereotypes actually are:

Urban League
The African Methodist Episcopal Church
Tuskegee Institute

What do these three institutions have in common? They are the result of African American philanthropy, and this is just the tip of the iceberg.

Not just an Amen!

Here’s another racial stereotype for you. Throughout my career, I’ve met many people who assume that African Americans only support their churches when it comes to philanthropy. Again, this just isn’t true. According to a 2002 report published by the W. K. Kellogg Foundation, the following is a list of giving priorities for the African American community:

Education
Public Affairs / Social Benefit
Children & Youth
Arts & Culture
Health
Other
Human Services
Religion

Huh? Go figure. Religion came in behind the category labeled “Other”.

To help put this list in context, more than half of respondents said “education” was their highest priority compared to approximately 5% who said “religion”.

Not just Buffet and Gates

Try playing this fun game with your friends. Ask them to close their eyes and blurt out the first name that comes to mind when you say the word “philanthropist”. I’ll bet that the most common responses will be Warren Buffet, Bill Gates, and even Donald Trump (gosh darn Celebrity Apprentice).

In reality, the African American community has (and had) more than its fair share of awesome philanthropists including:

Oprah Winfrey
Michael Jackson
Bill Cosby
Tom Joyner
Russell Simmons
Magic Johnson
Wyclef Jean

Did you know?

I thought it would be fun to end this post on a really positive note. So, I dug really deep in that old training curriculum for a few of those “OMG . . . I didn’t know that” type of factoids (most of which came from the Kellogg Foundation report):

“According to an analysis of IRS records by the Chronicle of Philanthropy, African Americans with $50,000+ income give a higher percentage of discretionary income than most Americans.”
“Most African Americans give to multiple causes and most giving is local (79%).”
“African American donors seem to forgo endowment building in favor of donating time and money to assist with more immediate community needs.”

Did anything here surprise you? Do you have any fun stories that you’d like to share on this final day of Black History Month? Do you have any special strategies or tactics in your written resource development plan focused on philanthropy and this community? Please scroll down and share your thoughts in the comment box below.

Here’s to your health!

Government funding, charities and difficult questions

February 25, 2013 erik Fundraising

In my hometown of Elgin, Illinois, we are gearing up for city council elections. There is a Primary Election tomorrow (February 26, 2013) to narrow the field for a two-year vacancy on the council, and the general election is April 9, 2013 where voters will fill the two-year vacancy as well as four additional four-year seats. A total of five seats are up for grabs, and 22 different people have their hat in the ring.

You’re probably asking: “What does any of this have anything to do with non-profit organizations or fundraising?”

As you can imagine, a race with those many people gets cluttered. Who stands for what? What are the issues of the day? Why are people running? In an effort to bring some clarity, The Daily Herald newspaper identified a few issues, talked to the candidates about those issues, and wrote stories about what they found. One of those stories is about the Elgin Symphony Orchestra (ESO) and its quest to restore its city funding.

I look at this local story and see bigger implications for the entire non-profit community nationwide. Increased pressure on government budgets in the upcoming years will transform how and where governments allocate money to non-profit agencies.

Accountability and sustainability

If you clicked the Daily Herald link above or this article from The Courier-News, then you know that one of the objections some folks have to funding the ESO is that they ran budget deficits for a few years and burned through some of their endowment during the economic downturn. This raises sustainability questions because no donor (regardless of whether they are an individual, corporation, foundation or governmental agency) wants to fund something that isn’t sustainable.

In this instance, the issue is evolving into an accountability question: “how can grant deliverables be designed to hold the ESO board and staff accountable to creating and implementing a sustainable business plan?”

There also appears to be a community standard evolving out of this discussion where some council members don’t want to provide funding at levels that would be too high for an agency to easily replace if the city ever decided to pull its funding. Of course, this approach creates challenges because it is difficult to hold agencies to meaningful grant deliverables when the dollars at stake aren’t big enough to fund programming capable of generating community impact.

What does the future of government funding across the country hold? I suspect we’re on the path to:

fewer funding opportunities,
smaller allocations,
increased accountability,
greater demand for sustainability planning and increased organizational capacity, and
more transparency.

Who should get what?

It is a simple fact that government has less money to work with today than it did yesterday.

Ahhhhh. Do you remember the late-1990s and 2000s, when government appeared to have money and spread it around to a number of different charities? I know that some of my non-profit friends fondly look back and proclaim: “Those were the days.”

With an economic slowdown and mounting debt problem, resources are getting tighter, which potentially means increased conflict over the question of: “Who should get what?”

In the past, the City of Elgin used its Riverboat fund and Community Development Block Grant (CDBG) funds to support non-profit agencies that aligned with the city’s strategic priorities and direction. Here are a few examples:

PADS of Elgin funding helped the city with its homeless population.
Elgin Chamber of Commerce helped the city with economic development.
Boys & Girls Club of Elgin helped the city address issues such as juvenile crime, gang activity, childhood obesity, and supplemental educational opportunities.
Elgin Symphony Orchestra was an investment in the arts as well as an economic engine that brought consumers downtown to spend their entertainment dollars.
Downtown Neighborhood Association (DNA) was aimed at economic development and an attempt to focus downtown merchants on revitalizing the central business district.

In this new world of government funding, we are already starting to see two things:

political candidates who are happy to turn these resource allocation issues into campaign issues (e.g. politicizing non-profit funding) and
non-profit agencies taking their case for support very public as they compete for public dollars.

Outsourcing versus insourcing

Back when the government funding gravy train was running strong, I noticed that the case for support for government funding of non-profit organizations involved the idea of “outsourcing” with the silent case for support being it costs non-profits less to provide these services because:

non-profit agencies pay their employees smaller wages,
non-profit employees have fewer fringe benefits than public sector employees,
there are fewer unions operating in the non-profit sector than there are in the government sector, and
an ounce of prevention is worth a pound of cure (e.g. keeping kids out of gangs is cheaper than funding the problems created by gangs and crime).

Outsourcing was a conservative solution to questions involving the appropriate role of government and the size of government.

Now that municipal budgets are shrinking and public sector layoffs are occurring, I predict that the idea of “insourcing” could become a trend. City recreation departments will try doing more with at-risk kids. Police departments will employ more social workers to deal with domestic violence. The planning department will hire economic development specialists.

This money will come in part from what is clawed-back from non-profit organizations.

If I am wrong on this hunch, then I suspect that money will be used to fund other city priorities like potholes, capital projects, and core city services. If this is the case, then we’re about to all pay a lot more money to address things associated with social problems.

Is your non-profit organization taking in a lot of government money to fund your mission? Are you worried about the direction things seem to be heading? What are you doing (if anything) to make adjustments?

Here’s to your health!

Bad cause related marketing is offensive

February 24, 2013 erik Fundraising

Have you ever been the victim of a bad cause related marketing promotion? If so, then perhaps you would agree with me that bad cause related marketing is offensive and even damaging to the non-profit industry. For this reason, the industry really needs to start policing itself and developing a set of commonly accepted best practices.

My story

On Saturday, I decided that I needed a new pair of glasses. So, I took a trip to the mall and walked into LensCrafters because it felt convenient. I saw the doctor. She poked around my eyes and dilated them. I picked out my frames and proceeded to check-out. During the process of ringing up the bill, we got to a point that sounded something like this:

Cashier: “Would you like to add $1.00 to your bill today to support a charity called OneSight?”
Me: “Ummmmmm, what is that?“
Cashier: “It is a charity that helps poor people around the world who suffer from bad eyesight.”
Me: “Can you tell me anything else about the charity?“
Cashier: “Ummmmmmm, no.”
Me: “Then no, I wouldn’t like to support that charity.”

My issue with this exchange

I understand that it is only one dollar, but as a donor don’t I deserve a better case for support than: “It is a charity that helps poor people around the world who suffer from bad eyesight.”?

Again, you’re probably thinking to yourself: “Come on, Erik. It is one dollar. You’re not going to get the song and dance that charities give you for larger ask amounts.”

Of course, you are right, but am I asking too much for something like:

A brochure sitting at the cash register that explains more about the charity.
In-store posters or displays explaining who this company’s charity of choice is and why it is their charity of choice?

Buyer beware!

So, I came home and decided to Google around to find a few answers about the charity I was asked to support at the LensCrafters cash register.

Here is what I found on the LensCrafters website:

“Twenty-five years ago, LensCrafters founded the OneSight organization with one purpose in mind: To provide better sight for all—everything from free eyecare to eyewear to important research that will change how people see tomorrow.”

Perhaps, I am being cynical, but isn’t LensCrafters asking its customers to fund its charitable work?

Back in the day, I remember corporate America feeling the need to re-invest part of its annual profits back into the communities from where those profits came or into a charitable mission about which they felt strongly. Again, I might be off-base here, but it feels like today some companies are keeping their profits and asking their customers to fund their charitable work and then turning around and asking for customer loyalty because of all their good works.

I did go to Guidestar and snoop around OneSight’s 990 forms, which as you know can be like deciphering hieroglyphs at times. From what I can tell, this organization raises very little money from more traditional resource development methods and gets most of its money from LensCrafters’ cause related marketing cash register program.

As a consumer, I believe I deserve a little transparency at the cash register if I am just being asked to essentially support a company’s charitable activities.

Is a brochure or display really asking too much?

Cause related marketing is here to stay

Cause related marketing is here to stay because it generates substantial revenue. It is an easy ask. After all, it is just one dollar, right? Come on. Isn’t it a small price for a concerned citizen and donor to pay so that they can feel good about doing something to feed a hungry person or give the gift of sight?

Call me old fashion, but this feels like lazy philanthropy, especially when companies can’t even be bothered to train their cashiers to answer a few questions or produce a brochure for distribution at the cash register.

If only there were best practices and some minimum standards that we could all agree upon.

Ummmm, wait! Perhaps, we have something . . .

My online friend, JoanneFritz, at about.com posted a great article titled “3 Cause-Related Marketing Trends That Matter to Nonprofits and Their Business Partners“. It is definitely worth taking a minute to click-through and read it.

Joanne ends her post with a call to action and includes a few good links for non-profit organizations that are searching for best practices.

Has your agency played around with any cause related marketing efforts? If so, what did you do? More importantly, what did you learn? Please share your thoughts in the comment box below. We can all learn from each other.

Here’s to your health!